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EXIM Bank says TEF-funded $1-b loan facility nearing exhaustion

ROSE HALL, St James — General Manager, trade and commercial lending at the Export-Import Bank of Jamaica (EXIM Bank), Lenworth Tracey, has indicated that the Tourism Enhancement Fund (TEF)-crafted $1-billion special loan facility with the bank is on the verge of exhaustion.

Tracey made the disclosure during his address at the second staging of the Tourism Linkages Network's Smart Destination 2018 Workshop held at the Montego Bay Convention Centre in St James, on Friday.

He later told the media that this was as a result of a surge in the take-up of the loan offer in the past three months. Tracey said business operators within the tourism sector are now more knowledgeable about the loan offering.

“With the uptake over the past three months, based on funds already disbursed to participants in the sector, funds that are formally committed — [which] means that you have approval in hand and are waiting on several things in their operation [phase] to draw down on the funds — and active application currently, we are probably at about 75 per cent into those funds currently,” Tracey said.

The general manager said this is a useful indicator of the current knowledge of the funds as well as tourism enterprises going for growth and cheaper funding.

The Small and Medium-Sized Tourism Enterprises (SMTE) loan is open to qualified entities within the tourism sector, the Tourism Linkages Network and to manufacturers and suppliers to hotels.

According to the bank's website, such entities are able to borrow up to $25 million at an interest rate of five per cent per annum, with up to five years to repay and up to 12 months moratorium on principal payments.

In 2016, TEF crafted the special loan facility with EXIM Bank as part of its drive to enable continued growth and sustainable development within the tourism industry.

On signing the Memorandum of Understanding (MoU) in 2016, TEF handed over $300 million to EXIM Bank, which was the first of three tranches.

The second tranche of $350 million was made during the 2017/2018 financial year.

While there is a final $350-million tranche that is to be handed over, the bank is currently having dialogue with TEF to provide more funds.

“These loans, however, are mostly medium-term loans. They run three to four years. So, as you will appreciate, the funds will not be revolving fast enough to provide sufficient replenishment of the funds. So, more recently, over the last two/three weeks, we have been having very active discussions with the Ministry of Tourism and the Tourism Enhancement Fund to see what we can do in terms of getting additional funds to put into this initiative,” Tracey explained to the media.

The general manager also pointed out that Minister of Industry, Commerce, Agriculture and Fisheries Audley Shaw is currently working on sourcing a larger amount of funds at a low interest rate for the productive sector.

“So, we are very optimistic that whether it be replenished through the Tourism Enhancement Fund, based on the works of minister Bartlett, or through initiatives from Minister Audley Shaw, that one way or another, we will be able to get the funding to keep this programme going, because, we've realised that it is of vital interest to keep lower cost funding low,” stated Tracey.

However, TEF Executive Director Dr Carey Wallace told the media that while TEF is excited about the take-up, consideration will be given to extending the programme once it is found to be justified upon review.

“If, when we look at the measures and the numbers and we find that it justifies us increasing the amount to continue the programme, then we will be happy to consider it,” Dr Wallace assured.

And, in relation to the final tranche of $350 million, Dr Wallace noted that based on the MoU signed with the bank, 90 per cent of what was given to the bank must be disbursed before TEF supplies the remaining amount.

“So far, I am confident that there won't be a case where it will run out, so to speak, and the SMTE be left out at sea. We have them covered,” Dr Wallace said.

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